The direct write-off method can mean that assets may be overstated in one year and understated the next.

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This is because the direct write-off method only writes off the asset when it is deemed uncollectible, which may not happen until a later period. As a result, the asset may remain on the books as an overstatement until it is finally written off, resulting in an understatement in the period when it is actually written off.

The Direct Write-Off Method Can Mean That Assets May Be